Financial system subject to government changes

After considering the results of a 2013 financial systems inquiry, the Australian government has released its response, highlighting a number of key agendas.

According to The Treasury, the financial sector is the largest within the Australian economy and directly affects productivity and growth across a wide range of industries.

The government's aim is to encourage innovation among financial institutions to support competition. The key to successful policies will be the ability to facilitate entry of disruptive processes, such as better use of customer data, creative funding and new payment methods.

For small businesses, the changes to crowd funding may help secure equity, supported by the right asset management software. Developing a crowd-sourced equity funding market in Australia will be a key priority for the government. A new Innovation Collaboration Committee will allow forward thinkers the chance to participate in policy development, which should contribute to the government draft legislation set for the end of 2015.

The outline also covered resilience measures to protect the wider economy against financial collapse. This includes identifying potential weak points within the financial system, building a stronger regulatory framework and putting in place a requirement for banks to be accountable for their own economic standing. As these institutions provide 90 per cent all credit to firms and consumers alike, these actions will be vital to protecting capital flows and mitigating risk of collapse.

Australian Chamber of Commerce CEO Kate Carnell welcomed the proposed changes, which the organisation described as "long awaited".

"[Legislation] will give greater scope to widen its focus to crowd sourced debt funding, which done correctly would also be very positive for small business growth and start-ups," she stated.